Why Is Palantir (PLTR) Stock Down 20% Today?

Palantir Technologies (NYSE:PLTR) stock is down 20% today after the data analytics company issued its latest quarterly financial results.

A close-up shot of a hand on a screen with the Palantir (PLTR) logo.
Source: Ascannio / Shutterstock.com

The company, based in Denver, Colorado, posted earnings that fell well short of Wall Street expectations, prompting today’s selloff. Palantir reported that its earnings for the three months ended March 31 were 2 cents per share, while its revenue increased 31% to $446 million.

Analysts who cover the company were looking for earnings per share (EPS) of 4 cents on revenues of $443.4 million.

So far this year, PLTR stock has declined 58%.

What Happened With PLTR Stock

Perhaps worse than its first-quarter results, Palantir provided weaker-than-expected guidance for the second quarter. The company said that its revenue for the current period will come in at $470 million. Wall Street had forecast Q2 revenue of $483.9 million.

Government agencies use Palantir’s software for intelligence gathering, counterterrorism and military purposes, and the company did say in releasing its Q1 results that the ongoing war in Ukraine has provided “upside” to its business.

In addition to its government work, which accounts for the majority of Palantir’s revenue, the company has been trying to grow and expand into the healthcare, energy and manufacturing sectors. It is not clear how successful those efforts have been.

Why It Matters

Palantir is emblematic of the type of high-growth tech stock that flourished during the depths of the pandemic but is now struggling amid a broad market selloff. Technology stocks have been particularly hard hit as investors sell equities in favor of safe-haven assets with interest rates rising and concerns growing that the U.S. economy could enter a recession.

Year to date, the technology-heavy Nasdaq index is down nearly 25% and firmly in bear market territory. PLTR stock is one of the stocks that has been hardest hit by the downturn amid concerns that its business is slowing and too reliant on government contract work.

Those concerns seem to have been confirmed by the company’s Q1 print, leading to a sharp downturn in the share price today.

What’s Next for Palantir

It’s a bad day to be a shareholder of Palantir. The stock is taking a big drop following lackluster results and a disappointing outlook. If the company hopes to turnaround the slide in its share price, it will need to prove that it can get its sales and profits on track and exceed analysts’ expectations going forward.

Until then, investors should expect PLTR stock to continue falling.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

Article printed from InvestorPlace Media, https://investorplace.com/2022/05/why-is-palantir-pltr-stock-down-20-today/.

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